From King Coal to Carbon Tax: A Historical Perspective on the Energy and Climate-Change Debate

Aug 5, 2011 - Chris Whitmore - pv-tech.org

Paul Sabin and Richard Morin/Solutions

The history of energy consumption in the United States shows how new fuels typically add to an expanding energy supply, rather than displacing other fuels. The historical pattern of adding to the fuel supply underscores the challenge of cutting back on carbon dioxide emission levels solely by increasing alternative energy production. This graph draws on data from the Energy Information Administration's Annual Energy Review 2008 (Government Printing Office, Washington, DC, 2009).

Current climate and energy policy debates in the United States rarely involve historians. If you search the Intergovernmental Panel on Climate Change’s 2007 synthesis report, you will not find the words history or historical. Even so, history pervades climate and energy policy discussions. History guides policy choices, inspires proposals for action, and structures institutional development.

Historical interpretations have already played a powerful role in guiding public choices between different national regulatory and tax strategies, even if that role has not been explicitly recognized. Interpretations of the politics of the early 1990s deeply shaped the national debate over whether to reduce carbon dioxide emissions through a cap-and-trade program or through carbon taxes. Many political observers believed that voters harshly punished Democrats in Congress in 1994 after they voted to impose a new energy tax in 1993. At the same time, the sulfur dioxide trading program under the 1990 Clean Air Act Amendments seemed to reduce power-plant emissions with comparatively minor political or financial consequences. In theory, a similar cap-and-trade program for carbon dioxide emissions could set an economy-wide cap and allow industries to trade pollution credits, thereby steadily improving efficiency and cutting emissions. Many economists and policy makers believed that a carbon tax would be more transparent, easily administered, and economically efficient than a cap-and-trade program. Yet the competing historical analogies from the 1990s persuaded most Washington politicians and many environmental advocates that a carbon tax would be political suicide. In the end, the cap-and-trade bill also died on the Senate floor, a casualty of the oil spill in the Gulf of Mexico and the political dynamics of the United States Senate.

Proponents of alternative energy likewise have turned to history to find stories that might inspire forceful government action to counter climate change. Proposals that the federal government invest billions of dollars in renewable energy embrace the legacy of the Manhattan Project for the atomic bomb and President John F. Kennedy’s call to put a man on the moon within ten years. The Apollo Alliance, an advocacy group, makes these space program connections explicit in pushing for a multibillion-dollar investment in clean energy. Narrowly focused public projects provide only an imperfect model for humanity’s planet-wide struggle against climate change. But the historical stories factor prominently in the public policy debate.

Past political strategies also have shown ways to advance national climate policy, even in the absence of presidential leadership. California’s early air quality regulations played a crucial role in forcing the adoption of a national Clean Air Act. Many climate advocates hoped to follow a similar strategy of forcing national standards through state policy innovation. California and other states have passed legislation regulating emissions and have entered into regional compacts to try to spur national action.

In these specific waysâ€”as policy guide, inspiration, and strategic modelâ€”history is being used to shape society’s response to the climate problem. More broadly, ideas about history that are prevalent in society also play a critical role in blocking action on climate change and energy. Several key history-based arguments have thwarted a strong public response:

Society’s dependence on fossil fuels resulted principally from market forces and shows the futility of distorting the energy market or subsidizing alternatives.

Governments have failed to direct the economy in helpful ways in the past, and therefore should not try to spur industrial innovation in efficiency and renewable energy.

Settlement patterns, the car-dependent lifestyle, and consumer behavior in the United States are fixed and unchangeable, rather than a recent and possibly tenuous development.

Past competition among states and nations shows that cooperation on climate policy is impossible to attain.

These stories all contain grains of historical truth. Yet they have become powerful, obscuring myths that distort political debate. In light of the frequent use of historical analogies and the deployment of these historical myths, historians clearly have an important role to play in the climate policy dialogue. Since historical interpretations help drive the policy process, with or without participation by historians, it is important that professional historians add their voices to the debate.

Will human societies shift away from fossil fuels in the coming decades? Historians can frame expectations about an energy transition, including the ways in which historical trends in energy politics and markets are likely to persist in the future. Current climate policy objectives seek to dramatically reduce carbon dioxide emissions by 80 percent by 2050. Is it possible to change an energy system so quickly? A historical perspective reveals that rapid energy revolutions have occurred in the past and that energy systems can rise and fall very quickly. For example, whale oil provided illumination in the mid-nineteenth century before kerosene rendered it irrelevant. King Coal gave way to oil for use in ships and railroads, and natural gas has begun to displace petroleum in recent decades. Even seemingly entrenched energy systems are malleable, as different forms of energy compete with and displace one another. Technological change during the twentieth century, including the mass adoption of automobiles and electric appliances and the invention of nuclear power, also underscores how hard it is to predict what new innovations might completely transform the energy economy.

Courtesy of Chicago History Museum

In 1926, streetcars and automobiles compete for primacy on shared streets in Chicago.

This general history of innovation and malleable energy systems suggests that society might meet ambitious climate goals for 2050. Yet the history of energy markets also raises significant concerns, and reveals how extraordinary the emissions reduction goals are. The rapid change they require has only occurred when the unique properties of a new fuel helped create a new market or made a competitor obsolete, such as the rapid adoption of oil for vehicular transportation during the early twentieth century. Additionally, new fuels historically supplemented existing fuels and expanded overall supply, rather than displacing prior fuels. The shift to oil stopped coal’s rapid growth, for example, but then coal found a new niche in electricity generation. Since the climate problem is defined as too much greenhouse gas emissions, rather than too little energy, only a solution that actually limits carbon dioxide emissions will work.

What does this history of changing fuels and expanding energy supply in the United States mean for our current energy and climate challenges? The evolving fuel mix suggests that ambitious 2050 goals are conceivable because broad changes in energy sources have occurred before in a relatively short period of time. Nevertheless, the hoped-for transition is unprecedented in scale. The publicly stated goals involve replacing currently functional fuels, for instance, by possibly imposing a moratorium on conventional coal-fired power plants. There are few comparable historical examples. Only government action to restructure the energy market has any hope of bringing society close to the new goals. Alternative sources of energy will not displace coal-fired power plants unless politicians rewrite the energy rules. Without constraints on carbon dioxide emissions, wind, solar, and other forms of renewable energy are likely to simply supplement fossil fuels, providing the economy with an expanded energy pie.

Public action to reshape US energy markets would build on an ample historical legacy of government involvement. Politics has always shaped the energy economy, and relative market prices are determined partly by politics. Take petroleum as an exampleâ€”for the past century, political choices have strongly promoted oil production and consumption. From tax subsidies for producers to generous oil leases and limited environmental regulation, government policies spurred the rapid development of oil reserves. Local, state, and federal governments also created demand for oil by spending trillions of dollars building highways, airports, and other infrastructure for oil consumption. The United States has spent more than a trillion dollars on diplomatic and military efforts closely tied to the need to keep oil flowing from the Persian Gulf. One of the most important lessons from the nation’s oil history is that there never has been a free market in energy, and there never could be. Public choices inevitably shape the energy sector through tax policy, property rights, labor law, diplomacy, and other unavoidable public decisions.

The government’s past role in the oil economy suggests the importance of finding new ways to talk about markets, ways that take efficiency into account while recognizing that markets are social institutions and that public policy has significantly determined prices in the past. Policy and politics established the playing field for market interactions among producers and consumers. In the future, the United States will continue to make political choices about the energy economy. What kind of energy system will these political choices favor? Historical scholarship suggests that the answer will reflect political power and social values as much as technological efficiency and available resources.

An energy system involves more than the mere production and consumption of energy; it is embedded in rules and institutions that usually favor dominant fuels. Rulemaking and institutional structures reflect and reinforce commercial dominance in the energy market. The relationship between streetcars and automobiles illustrates the important shift in rules that accompanied the rise of the oil age. As automobiles rose in importance, streetcars lost privileges. Streetcars had to make way for autos that cut in front of them and slowed them down. Taxes on streetcars helped pay for road construction and repairs that benefited autos, whereas taxes on auto use simply fed back into the highway system. In this fashion, ascendant energy and transportation systems are rewarded with privileges that enhance their dominance.

Moving to a new fuel mix will necessarily involve years of political conflict to restructure policies and institutions to favor efficiency and fuels that do not produce greenhouse gases. These conflicts will occur at all levels of government and across the legislative, executive, and judicial branches. A group of articles collected on The New York Times’ Green Inc. blog in February 2009 illustrates how energy politics are changing across the United States. Gathered under the heading “A Tough Week for Coal,” the articles described a series of setbacks across the country, from the local to the national level. During this one week, Michigan’s governor called for a near-moratorium on new coal-fired plants, as did the Georgia state legislature. In an area of West Virginia, residents sued eight coal companies over contaminated tap water, while in another part of the state anti-coal activists chained themselves to equipment at a mountaintop removal mining operation. The Air Force rejected proposals to build a large plant around Malmstrom Air Force Base in Montana that could convert coal into liquid fuel. Lastly, the Justice Department and Environmental Protection Agency imposed a $1.4 million civil penalty on Kentucky Utilities for clean air violations and required the company to spend another $135 million on pollution controls. In this fashion, new energy rules, set by the executive, legislative, and judicial branches at the local, state, and federal levels, have started to strip power from the coal industry and create a new market framework.

Emerging political conflicts over wind farms, solar installations, and biofuels reinforce the simple, yet enduring historical lesson that every kind of energy comes with a cost. While there is a material reality to energyâ€”in terms of how much wind, oil, or sun is available, and how much energy can be squeezed from a corn cropâ€”societal decisions about energy also typically involve challenging choices reflecting competing interests and values. The trade-offs usually are not clearly linked. Rather than a coherent national energy policy, the United States historically has balanced competing priorities and interests through ostensibly unconnected political battles throughout the governance system.

The United States’ energy future will be as fiercely contested as its past, shaped as much by societal values, economic interests, and political choices as by technology and available sources of energy. Talking more about the history of change and possibility can facilitate creative policy making, helping to free public debate from a mythic energy past. Several historical themes offer suggestiveâ€”and correctiveâ€”lessons relevant to policy discussions about energy and climate:

Our current car-based, fossil-fuel dependent society developed only recently and, like the social organization that preceded it, it can be changed.

Government has shaped energy markets in the past and it will continue to structure them in the future.

Climate changes in the past have been difficult to adapt to, and predicted future climate change warrants dramatic action.

Successful cooperation among states and nations has occurred on energy and trade issues in the past, and is possible in the future.

National innovation policies have established new industries, such as the Internet, and can drive future energy technology development.

History does not provide a roadmap for the future but rather, stories, parables, and analogies that help inspire and guide our thinking. The stories that have blocked action on climate change and the ones that might give us hope are already present in our consciousness and in our history. Each needs to be told and retold, and tested to see which is most compelling. Serious engagement with these stories will puncture many dominant myths, showing the potential for public action and anticipating the enduring political struggle that guides the energy economy. Historians, just like more technical experts, have an opportunity to shape society’s response to one of its most complex and urgent problems. Historians can help ensure that climate and energy debates better reflect a fundamental historical truth: The energy system reflects political power and social values as much as it reflects the latest engineering and science.